Peru s political and social crisis has continued, undermining governability. Social tensions sprout from idiosyncratic institutional fragilities. While macroeconomic policies have remained remarkably unscathed, we have downgraded our 2023-24 growth forecasts following recent developments.

We project moderate current account deficits despite strong imports. Nonresident capital flows will rebound this year, particularly in Brazil and Chile, and foreign reserves will improve supported by IMF SDR allocation. We see capital flows gradually slowing amid tighter global liquidity conditions.

LatAm countries have been forced to partially extend fiscal policy support this year amid increased social demands. Maintaining some stimulus while sustaining investor confidence has proven challenging. Fragile public finances could result in undue pressure on monetary policy, weighing on growth.

Base metal prices have far exceeded our initial forecasts, supported by low inventory. We expect average base metal prices to be 44% higher in 2021 and decline by 5% in 2022 as some supply constraints ease.

Inflation has picked up amid high commodity prices, supply disruptions, and uneven growth recovery. Scope to postpone monetary policy normalization has rapidly narrowed, and we see most countries hiking this year. Persistent fiscal fragility could complicate orderly unwinding of monetary stimulus.

In Peru, the upcoming runoff could result in a radical policy shift to the left, weighing on the currency despite a strong growth rebound and high copper prices. In Colombia, an ambitious fiscal reform has triggered protests and social unrest, which makes keeping investment-grade status less likely.

Frontier LatAm countries have bounced back following a sharp decline in 2020, but disparities in the recovery remain. Guatemala has already surpassed pre-COVID-19 GDP levels, while Panama continues to face challenges. Fiscal accounts have been severely affected, worsening public financing woes.

COVID-19 has exacerbated regional labor market vulnerability, and lockdowns have worsened the deterioration in employment conditions. Uneven losses across formal and informal sectors suggest declining job quality. Slow post-lockdown job growth raises fears of a jobless recovery in some countries.

Activity has bounced back strongly following a sharp contraction in 2020Q2. The impact of political turmoil on the economy has been modest, and nonresident flows into government debt have remained stable. Uncertainty ahead of the April 2021 general election is the main risk to the growth outlook.

We project a real GDP contraction of 7.5% in 2020 and a modest rebound in 2021. Tourism remains depressed, but remittances have surpassed pre-COVID-19 levels. SLV, JAM, and PAN are set to endure the steepest recessions, while GTM should contract the least due to its stable macroeconomic framework.

Exchange rate flexibility has eased the adjustment to COVID-19 in most large countries. However, "fear of floating" is still high across Central America and the Caribbean. While local market financing is increasing, countries have largely had to borrow in hard currency to help withstand the shock.

COVID-19 has widened fiscal deficits and spurred needs for additional funding. As a result, QE-type measures have gained impetus amid disinflationary pressure. While countries with sounder institutions can take more aggressive steps, we expect QE to remain modest barring a resurgence of instability.

COVID-19 has increased external funding challenges despite moderate borrowing needs. Notwithstanding oil price relief, collapsing remittances and tourism will weigh on current account receipts. While some countries have tapped global debt markets, uncertainty over financing sources remains.

COVID-19 has affected Latin America through multiple channels. Pre-existing challenges and increased exposure put the region in a difficult position. We project a deep recession this year amid a sudden stop in capital flows and limited policy space.

Current account deficits in Frontier LatAm are wide by EM standards, largely due to energy trade imbalances, but lower oil prices since 2014 have helped ease financing gaps. Despite global headwinds and regional tensions, we project CA deficits to stay contained in 2019-20, broadly financed by FDI.

We analyze external adjustment in Colombia, Peru, and Chile, commodity exporters with sound macro policy frameworks, in the aftermath of the decline in commodity prices. Despite real depreciation, exports have improved only modestly, with most of the adjustment due to significant import compression.

Growth has strengthened, driven by fiscal stimulus and favorable terms of trade. Fiscal consolidation remains a challenge amid increased global volati.

Most countries have eased monetary policy to support growth. We analyze the recent period of strong currency depreciations to obtain guidance on the p.

Kuczynski plans to expand the private sector role as a growth engine, building upon the current macro framework. The new administration is wel.

" The second-round runoff is wide open. At this point, former finance minister Pedro Pablo Ku.

Fujimori wins first round. With 83% of the votes now counted, Keiko Fujimori (Fuerza Popular) won the presidential elections held on April 10 with alm.

The.

The growth recovery is being driven by countercyclical support.

Real GDP growth has slowed sharply this year due to terms of trade losses and an erosion of confidence. To support economic activity, the central bank.

Following a decade of impressive growth propelled by high commodity prices, ample global liquidity and a credible macroeconomic policy framework, the.

Peru has weathered well the increased global financial volatility over the last few months. However, growth has softened below-trend under the weight.

Terms of trade losses and higher U.S. Treasury yields have taken a toll on growth momentum. However, policy prudence in the years of the commodity boo.

Currency appreciation pressures have intensified, reflecting the country's strong growth prospects and a reduction in global risk aversion. Seeking to.

With inflation converging to a demanding target of 2% (' 1%), real GDP is on track to grow about 6% this year driven by strong investment. While prese.